For the Auto Industry, California Already Has Seceded

Written by: Ted Reed11/27/12 - 6:15 AM EST

Tickers in this article:
F GM TM HMC

LOS ANGELES ( TheStreet) -- In terms of the automotive market, California long ago seceded from the rest of the country.

The Los Angeles Auto Show, the auto show for the state where 11% of all U.S. retail auto sales occur, opens for the media on Wednesday and for the public on Friday. At the show, which provides a look at the industry from California's viewpoint, some 50 vehicles will make their global or North American debuts. The emphasis will be on green cars, imports and luxury cars.

California accounts for a third of all electric vehicles and a quarter of all hybrid vehicles sold in the U.S., according to Edmunds.com. It is among the few states where imports dominate. And its abundance of high-wealth households creates a strong market for luxury vehicles.

At the auto show, the top introductions will be the new Honda (HMC) Civic and the Toyota (TM) RAV-4. For Detroit, the principal event will be GM's (GM) introduction of the new Chevrolet Spark electric vehicle. Ford (F) will show the new Fiesta, first shown at the Paris Motor Show in September.

For the first nine months of 2012, the list of the top 10 new car registrations in the Los Angeles area didn't include a single Detroit vehicle, according to Edmunds.com. In the L.A. market, which accounts for more than half of California retail sales, the top 15 registrations included only one Detroit vehicle, the number 15 F-Series pickup. The top 20 includes only one other Detroit vehicle, the Chevrolet Silverado, at No. 20. Chevrolet Cruze was No. 28.

By contrast, the top 10 U.S. vehicles for the first 10 months are led by F-Series and Silverado, with the Dodge Ram at No. 8, Ford Escape at 10, Focus at 11, and Chevrolet Cruze at No. 13. California has "an import car bias," said Edmunds.com analyst Jessica Caldwell, on a recent conference call with auto reporters.

As far as electric vehicles and hybrids, "California is big in the green market," Caldwell said. "If there is a green movement, it usually starts in California."

California believes it should play an active role in promoting green technology. For more than a decade, it has required automakers to sell a number of vehicles that produce little or no tailpipe exhaust. This regulation encourages electric vehicles, even if they lose money. For instance, the auto show introductions will include Chrysler's first battery-powered car, the Fiat 500e, which will cost the company $8,000 and $9,000 per sale, CEO Sergio Marchionne has estimated. Said Caldwell, "There will be an electric car in the portfolio of every domestic automaker."

For the moment, however, the Honda Civic is at center stage. It is the No. 1 vehicle in California, accounting for 4.4% of the state's retail, and in Los Angeles, where it accounts for 4.5%.